21. An asset is purchased on January 1 for $40,000. It is expected to have a useful life of five years aer which it will have an expected residual value of $5,000. The company uses the straight-line method. If it is sold for $30,000 exactly two years aer it is purchased, the company will record a:

A. gain of $6,000.

B. gain of $4,000.

C. loss of $4,000.

D. loss of $6,000.

23. On October 1, 2021, Saddleback, Incorporated negoates with its bank to borrow $18,000 cash on a one-year note. The bank charges 5% interest. Interest payments are to be made in two installments, on March 31 and September 30. The principal is to be repaid on September 30, 2022, the maturity date. What adjusng entry needs to be recorded of December 31, 2021?

A. Debit Interest Expense and credit Interest Payable for $450.

B. Debit Interest Expense and credit Interest Payable for $225.

C. Debit Interest Expense and credit Interest Payable for $900.

D. Debit Interest Payable and credit Interest Expense for $900.